Most Americans are falling behind when it comes to saving money. In fact, the U.S. savings rate fell to a 10-year low in September, MarketWatch reports. Yet young people have reason to hope.
According to personal finance site NerdWallet, the average millennial has $670 extra per month. If that's invested with an 8 percent rate of return, it's enough to become a millionaire in around 31 years, according to CNN Money's helpful millionaire calculator.
NerdWallet determined potential savings rates using average annual incomes and expenditures by age group from the Bureau of Labor Statistics' 2016 Consumer Expenditure Survey. The savings rate refers to the surplus of income left after all expenses are accounted for.
Here's how millennials stack up against other generations, according to their findings:
It's important to note that NerdWallet looked at the average potential savings rate, not the median, meaning that a few super savers can artificially inflate the number. Still, it's an interesting and helpful benchmark.
While it can be valuable to see where you stand against others your age, the big question is: How much should millennials be saving per month?
At face value, that's a lot. But let's break it down. That 25 percent not only includes direct contributions to a 401(k) or Roth IRA but also any company match you receive and any cash savings, including an emergency fund. Greene says you can also count any funds you're putting toward credit card debt and student loans in that percentage as well.
Besides, to successfully save in your 20s, the dollar amount isn't the only thing that matters. It's equally important to build the habit of saving a portion of your income every month, even if that number starts small, so you can gradually begin to save more.
"The idea is to have a plan, and then to work that plan so that it takes the anxiety and stress out, not that it makes you feel worse about the situation," Greene says.
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